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11/04/2013

Legal pedigree from the courtroom to the boardroom

Law schools and law firms are embedded in a very rigid prestige hierarchy. The hierarchy is so pervasive that almost every lawyer and law student is keenly aware of it. On the positive side, the hierarchy gives rise to labels such as "Big Law," the "T-14," and "HYS." On the negative side, there are acronymic and alliterative labels that tend toward epithet.

The causes of the hierarchy are many, but perhaps most often blamed is excessive reliance on a single ranking system for law schools and a legal culture that responds obediently to that system. There is evidence, however, a recent paper by Arewa, Morriss and Henderson entitled Enduring Hierarchies in American Legal Education, that the hierarchies have existed for decades, predating emergence of any hegemonic ranking system. The authors view the hierarchy as being entrenched and replicated within the echo chamber of the legal profession:

Enduring hierarchies reflect deeply embedded perceptions of prestige that are reinforced throughout the legal academy and legal profession more generally. These hierarchies make perception a reality and contribute to a fabric within the legal academy and legal profession that continues to replicate itself. (p. 82)

Is the legal hierarchy really driven by the legal profession itself? What if we could have a glimpse into a perspective on law school prestige from outside the legal echo chamber? Would the very same hierarchy manifest itself, or would criteria other than decades old rankings dominate?

I decided to look to the world of business, where personnel decisions are often thought to be meritocratic and results-based rather than aristocratic and pedigree based. I decided to examine which lawyers businesses choose to lead them as insiders--directors and officers of corporations, who are chosen largely by business people rather than other lawyers. To see how much law school pedigree affects those decisions, I chose the most visible and arguably prestigious slice of lawyers in business--lawyers who manage publicly traded companies--to see where those lawyers attended law school.

To accomplish this, I collected data from proxy statements and annual reports filed by publicly traded companies to determine what law schools executive officers and directors of those companies attended. The rules of the Securities and Exchange Commission require companies to provide the "business experience" of directors and executive officers (D&Os) in either their annual reports or proxy statements. Those descriptions often include information about colleges, law schools, and other graduate schools attended. I used a computer script to automatically extract most (but not all) law schools listed in the proxy statements or annual reports of publicly traded companies for the year ending September 30, 2013.

The process retrieved 1,760 individual mentions of law schools attended by D&Os (J.D. only) from 1,503 distinct filing companies. I collected the counts for each law school and normalized the counts for law school size (blended over time). To do this, I used the same figures I previously used to rank law schools by the number of big firm partners they produced. The analysis produced the following ranking of the top 25 law schools represented in public company boardrooms and C-suites.

Law School Name

D&Os
Per

Student Enrolled

Number of
D&Os

Weighted
Number Enrolled

1

Harvard University

0.3610465

207

573.3333

2

Stanford University

0.3588785

64

178.3333

3

Columbia University

0.2719298

93

342

4

Yale University

0.2404007

48

199.6667

5

Cornell University

0.1784387

32

179.3333

6

University of Chicago

0.1666667

30

180

7

New York University

0.1573034

63

400.5

8

University of Pennsylvania

0.1311244

31

236.4167

9

University of Michigan--Ann Arbor

0.1238532

45

363.3333

10

Northwestern University

0.1220504

25

204.8333

11

University of California--Berkeley

0.1172291

33

281.5

12

Georgetown University

0.1122086

71

632.75

13

University of Virginia

0.1031291

39

378.1667

14

Pennsylvania State University

0.0996094

17

170.6667

15

University of Notre Dame

0.0930233

16

172

16

West Virginia University

0.0915157

12

131.125

17

University of Texas--Austin

0.0875622

44

502.5

18

University of Southern California

0.0847176

17

200.6667

19

Boston College

0.0837379

23

274.6667

20

Duke University

0.0825451

16

193.8333

21

George Washington University

0.0780742

35

448.2917

22

Fordham University

0.0760503

31

407.625

23

Vanderbilt University

0.0727612

13

178.6667

24

Boston University

0.0720721

28

388.5

25

Brooklyn Law School

0.0619899

25

403.2917

The table's hierarchy is very similar to any standard ranking of law schools other than a few outliers. On the one hand, West Virginia manages to break into the top 25, largely because of its small size and critical mass of graduates in public company positions. Similarly, Penn State (Dickinson) manages to climb even higher. These two unexpected results break up the otherwise standard ranking.

On the other hand, the traditional top 14 schools clearly dominate the list, collectively amounting to about half of the total public company D&Os. Indeed, a small fraction of executive officers and directors of public companies come from law schools outside these 25. To give a sense for how influential pedigree appears to be, consider as comparisons the percentage of members graduating from Top-14 schools in the table above (45%) with those in legal academia1 (56%) and NLJ 100 Law Firm Partners2 (39%), two career fields thought to be obsessively pedigree-focused.

Thus, the D&Os of public companies replicate the hierarchy of law schools. Indeed, pedigree appears to play a more significant role in the boardroom than in big law firm partnership ranks, and nearly as significant a role as in legal academia. These results were surprising to me, and point to a very strong role of the legal hierarchy extending outside the legal profession.

On the one hand, one might be tempted to dismiss the results as simply reflecting the fact that higher ranked schools tend to attract higher quality students who in turn have greater success in high profile roles such as D&Os of public companies. The higher quality of students at higher ranked schools is undoubtedly is part of the story, but I would submit that law school admissions processes are not so precise in predicting future performance as to account for the stratification revealed in the table. Instead, it seems clear that pedigree is playing a significant role, completely independent of quality, in the selection of lawyers who play a role in senior management of public companies.

These results are really an independent confirmation (and indeed an extension) of Arewa, Morriss and Henderson's thesis. The hierarchy of law schools is real and it is nothing new (remember that the median age of directors is about 60, so we are not dealing with people whose career was dictated by US News rankings!) Moreover, the pedigree effect appears to be so strong that it must be exerting its own independent effect above and beyond student quality. Finally, this data shows that the pedigree effect is not merely limited to affecting lawyers who choose other lawyers--it also exerts its effect over businesspeople, perhaps to an even greater extent.

This is just a preliminary foray into this issue, and I welcome questions, objections, and other remarks in the comments. If you are interested in analyzing the data, just let me know and I'll send it to you.

Comments

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What if the top schools on the list are teaching students better skills for business? This seems like a third explanation apart from the signaling value of admissions or the independent effects of prestige.

Will, I suppose it's possible that higher ranked law schools teach business skills better, that business people appreciate that teaching prowess, and that the results could be attributed to that. Given the way law professors are selected, I somehow doubt it, but these data are to a large extent historical and perhaps things were different at one time. Let's see what other commmenters think.

A very interesting analysis, but does it really account for the "legal echo chamber"?

You have to ask yourself, how do lawyers get to be directors and officers of publicly traded companies?

Typically, they do so via the general counsel's office of that particular corporation.
GC's offices very very rarely hire form anywhere other than large corporate law firms (a student coming directly out of law school--be it Harvard or Cooley--would not have the requisite skills to work there upon graduation).
Where do these law firms hire from? The T14.
Why do they hire from the T14? Because they're the T14.

It's obviously more complex than that, but I'm not sure it's that much more complex, so I'm not sure that this study really shows independent confirmation (outside the "echo chamber") of the quality of law schools.

Hi JC, and thanks for the comment. I think we actually agree. I am arguing that the companies seem to choose board members based on their pedigree for its own sake. When I said referred to "independent confirmation" I didn't mean to say confirmation of the quality of law schools, but of the pedigree effect described by the authors in their article.

Got it--should have read better--in that case we do agree. It'd be interesting to see a law school ranking based on something other than numbers (US News) / prestige (Above the Law), like the Washington Monthly rankings for colleges, but somehow I doubt that will happen...

JC, no problem. I'm sure others were wondering the same thing. I certainly agree with you about the limitations of US News. I still have faith in the idea of a quantitative ranking (or more accurately, multiple rankings along different dimensions) based on combining different attributes of schools.